SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- -------------
Commission File No. 0-7181
ROCHESTER & PITTSBURGH COAL COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0761480
(State or other jurisdiction of (I.R.S. Employer Iden-
incorporation or organization) tification No.)
655 Church Street, Indiana, Pennsylvania 15701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 724/349-5800
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days. Yes No x
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of
shares outstanding of each of the issuer's classes of common stock,
as of April 30, 1998. 3,440,984 shares.
<PAGE> 2
<TABLE>
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
March 31 December 31
1998 1997
------------ -----------
ASSETS
------
<S>
Current Assets <C> <C>
Cash and cash equivalents $ 38,812 $ 37,026
Receivables 28,220 29,414
Inventories and other current assets 10,219 13,914
Deferred income taxes 5,093 4,714
------------ -----------
Total Current Assets 82,344 85,068
Other Assets
Investments in marketable securities 21,098 20,166
Funding for:
Workers' compensation benefits 13,750 12,950
Mine closing reserves 12,369 12,135
Deferred income taxes 20,282 14,894
Miscellaneous 18,365 17,475
------------ -----------
85,864 77,620
Property, plant, and equipment 590,245 585,356
Less allowances for depreciation, depletion,
and amortization 238,364 229,910
------------ -----------
351,881 355,446
------------ -----------
$ 520,089 $ 518,134
============ ===========
<PAGE> 3
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $ 15,504 $ 16,780
Accrued liabilities 25,725 21,038
Income taxes payable 5,065 6,111
Current maturities of long-term debt 8,055 10,301
------------ -----------
Total Current Liabilities 54,349 54,230
Other Liabilities and Long-Term Debt
Other postretirement benefits 82,942 81,469
Workers' compensation benefits 43,736 42,006
Mine closing reserves 24,806 24,300
Black lung benefits 8,923 8,708
Deferred income taxes 13,941 13,853
Miscellaneous 3,518 3,518
Long-term debt (less current maturities) 83,146 84,535
------------ -----------
261,012 258,389
Shareholders' Equity
Common stock issued, 3,989,121 shares 59,837 59,837
Capital in excess of stated value 133,125 133,125
Retained earnings 40,316 41,124
Accumulated other comprehensive income (loss) (745) (766)
------------ -----------
232,533 233,320
Less treasury stock at cost - 548,137 shares 27,805 27,805
------------ -----------
204,728 205,515
------------ -----------
Total Liabilities & Shareholders' Equity $ 520,089 $ 518,134
============ ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 4
<TABLE>
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Amounts in thousands, except for outstanding shares and per share amounts)
<CAPTION>
Three Months Ended
March 31
------------------
1998 1997
---- ----
<S> <C> <C>
Production Tonnage 2,390 1,032
========= =========
Sales Tonnage 3,032 1,374
========= =========
Sales 83,208 51,888
Other Income:
Gain on sale of property 151 2,059
Interest and dividends 768 1,129
Net investment gains (losses) 13 (171)
Miscellaneous 364 390
--------- ---------
84,504 55,295
Costs and Expenses:
Cost of sales 75,991 48,087
Depreciation, depletion, and amortization 8,971 3,469
Selling, general, and administrative 1,515 1,652
Interest 2,395 468
Miscellaneous 271 869
--------- ---------
89,143 54,545
--------- ---------
Income (Loss) Before Income Taxes (4,639) 750
Provision (Credit) for Income Taxes (4,347) 729
--------- ---------
Net Income (Loss) $ (292) $ 21
========= =========
Net Income (Loss) Per Share $ (.08) $ .01
========= =========
Average shares outstanding
used in the computation
of per share amounts 3,440,984 3,440,984
Shares issued and outstanding
at March 31 3,440,984 3,440,984
Cash dividends declared
per share $ .15 $ .15
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 5
<TABLE>
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Three Months Ended
March 31
----------------------
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (292) $ 21
Adjustments for non-cash items 3,148 2,436
Changes in certain assets and liabilities
(using) or providing cash 9,153 (3,460)
--------- ---------
NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES 12,009 (1,003)
--------- ---------
INVESTING ACTIVITIES
Proceeds from available-for-sale
investments 2,700 38,696
Acquisition of available-for-sale
investments (3,484) (2,775)
Acquisition and development of
property, plant, and equipment (4,954) (8,560)
Proceeds from sale of property, plant, and
equipment 182 2,227
--------- ---------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (5,556) 29,588
--------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings 23,000 69,350
Payments on borrowings (26,635) (103,446)
Cash dividends paid (1,032) (516)
Debt issuance costs -- (2,263)
--------- ---------
NET CASH (USED IN)
FINANCING ACTIVITIES (4,667) (36,875)
--------- ----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,786 (8,290)
Cash and cash equivalents at beginning of year 37,026 34,466
--------- ---------
CASH AND CASH EQUIVALENTS AT MARCH 31 $ 38,812 $ 26,176
========= =========
<PAGE> 6
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid (net of capitalized interest) $ 2,234 $ 559
========= =========
Income taxes paid $ 2,375 $ 315
========= =========
Noncash financing and investing activities--
seller financing of equipment to be leased $ -- $ 11,704
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 7
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1998
Note A - Basis for Presentation
- -------------------------------
The accompanying unaudited Consolidated Condensed Financial Statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1997.
The Company's subsidiary, Eighty-Four Mining Company, completed
development of its Mine No. 84 in October 1997. Consequently, all tonnage
data and revenues and expenses, other than its provision for income taxes,
certain real estate tax expenses, and certain general and administration
expenses, were not included in the 1997 results in the accompanying
Consolidated Condensed Operating Statements.
<PAGE> 8
Note B - Comprehensive Income
- -----------------------------
As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income," which
establishes new rules for the reporting and display of comprehensive
income and its components. The adoption of this Statement had no impact
on the Company's net income or shareholders' equity. Statement 130
requires unrealized gains or losses on the Company's available-for-sale
securities and foreign currency translation adjustments, which prior to
adoption were reported separately in shareholders' equity to be included
in other comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of Statement 130.
The components of comprehensive income (loss), net of related tax,
for the three-month periods ended March 31, 1998 and 1997 are as follows:
1998 1997
---- ----
(in thousands)
Net income (loss) $(292) $ 21
Unrealized (losses) on securities (7) (463)
Foreign currency translation adjustments 28 (38)
----- -----
Comprehensive income (loss) $(271) $(480)
===== =====
The components of accumulated other comprehensive income (loss), net of
related tax, at March 31, 1998 and December 31, 1997 are as follows:
1998 1997
---- ----
(in thousands)
Unrealized gains on securities $ 403 $ 410
Foreign currency translation adjustments (1,148) (1,176)
------ ------
Accumulated other comprehensive income (loss) $ (745) $ (766)
====== ======
<PAGE> 9
ROCHESTER & PITTSBURGH COAL COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL POSITION
March 31, 1998
The following is Management's discussion and analysis of certain
significant factors which have affected the Company's (1) results of
operations during the periods included in the accompanying Consolidated
Condensed Statements of Income and (2) financial position since
December 31, 1997:
Results of Operations
- ---------------------
The Company's subsidiary, Eighty-Four Mining Company, completed
development of its Mine 84 as of October, 1997, and the development phase
accounting treatment in effect since 1993 ended as of that date. The
results of the Eighty-Four project, other than the provisions for
income taxes, certain property taxes, and certain general and
administrative costs are not included in the Consolidated Condensed
Statements of Operations for the periods through October 31, 1997.
Therefore, the inclusion of Eighty-Four's sales, cost of sales, interest
expense, and depreciation, depletion, and amortization in the consolidated
operating results for 1998 affect the comparison to the prior year.
The Eighty-Four project recorded a pretax loss of $7.5 million in the
quarter ended March 31, 1998. As previously reported and as discussed in
Note A, Eighty-Four was in the development stage through October, 1997, and
capitalized all but $1.3 million of costs relating to development in the
three months ended March 31, 1997. The current quarter loss is primarily
the result of the first longwall mining system's being out of operation in
the months of February and March while the next mining panel was being
prepared for mining.
As previously reported, Eighty-Four will also incur sizeable losses
in the second quarter due to the downtime associated with both longwall
mining systems. While the first longwall system resumed mining in the
north portion of the mine approximately three weeks ahead of forecast, the
second longwall mining unit experienced poor mining conditions in its
panel completed in early April and will be out of operation approximately
three weeks longer than expected. Overall, continuous miner advance rates
have continued to improve during the quarter.
The Company's subsidiary, Keystone Coal Mining Corporation, operated
at a profit in the current quarter compared to a slight loss in the first
quarter of 1997 due to the favorable effect in 1998 of decreasing coal
inventories under the pricing provisions of its coal supply agreement.
The slight improvement in earnings was in spite of lower productivity for
the current quarter.
<PAGE> 10
The Company's subsidiary, Helvetia Coal Company, recorded pretax
income of approximately $600,000 on a 7% increase in tons sold as compared
to a loss of approximately $1.5 million for the first quarter of 1997.
This was due to (1) productivity increases at both of its operating mines
and (2) the lack of depreciation expense in the current period due to the
write-down of Helvetia's plant and equipment to zero in the second quarter
of 1997. Had the write-down not occurred, depreciation expense in the
current quarter would have been approximately $1 million.
Pretax income was enhanced in the first quarter of 1997 by the sale
of certain nonstrategic properties resulting in gains of $2.1 million,
compared to similar gains in 1998 of $150,000.
The Company recorded net investment losses of $171,000 in the first
quarter of 1997 due to the sale of securities in order to provide funding
required for the Eighty-Four project. The resulting reduction in
investments reduced interest and dividend income in the first quarter of
1998.
Depreciation, depletion, and amortization was substantially higher
in 1998 due to the inclusion of Eighty-Four's operating results in the
current year. The increase was partially offset by the aforementioned
reduction in Helvetia's depreciation and amortization due to the write-off
in 1997.
While long-term debt balances were lower in the first quarter of 1998
compared to the first quarter of 1997, interest expense thereon, as
recorded in the statement of operations, increased. This was due to the
inclusion of amounts relating to the Eighty-Four project in the statement
of operations for the first three months of 1998.
The decrease in miscellaneous expense in 1998 reflects the write-off
in 1997 of certain debt issuance costs relating to Eighty-Four's previous
debt arrangement which was modified in March, 1997.
The income tax provision for the current quarter is based upon the
estimated effective tax rate for the year. The estimated effective tax
rate differs from statutory rates due to the reversal of state and federal
deferred tax liabilities for temporary differences that arose during
Eighty-Four's development and the relationship of those amounts to pretax
income (loss) for the year.
Liquidity and Capital Resources
- -------------------------------
Working capital at March 31, 1998 was $28 million compared to
$31 million at December 31, 1997. The Company's current ratio (ratio of
current assets to current liabilities) was 1.5 to 1 at March 31, 1998
compared to 1.6 to 1 at December 31, 1997. The reduction is due to the
operating losses and reduction in accounts receivable caused by the
longwall outages at Eighty-Four.
The Company is continuing to pursue the sale of nonstrategic coal
reserves and surface properties in order to improve liquidity.
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
ROCHESTER & PITTSBURGH COAL COMPANY
THOMAS W. GARGES, JR.
Thomas W. Garges, Jr.
President and Chief Executive Officer
GEORGE M. EVANS
George M. Evans
Vice President and Treasurer
Date: May 15, 1998
<PAGE> 12
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 38,812
<SECURITIES> 0
<RECEIVABLES> 28,220
<ALLOWANCES> 0
<INVENTORY> 7,130
<CURRENT-ASSETS> 82,344
<PP&E> 590,245
<DEPRECIATION> 238,364
<TOTAL-ASSETS> 520,089
<CURRENT-LIABILITIES> 54,349
<BONDS> 83,146
<COMMON> 59,837
0
0
<OTHER-SE> 144,891
<TOTAL-LIABILITY-AND-EQUITY> 520,089
<SALES> 83,208
<TOTAL-REVENUES> 84,504
<CGS> 75,991
<TOTAL-COSTS> 75,991
<OTHER-EXPENSES> 10,757
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,395
<INCOME-PRETAX> (4,639)
<INCOME-TAX> (4,347)
<INCOME-CONTINUING> (292)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (292)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
